The Next "Non-Interference" Clause

The biopharma industry is quite pleased with Oregon Democratic Rep. Kurt Schrader’s bill to create a federal comparative effectiveness research institute. His bill (HR 2502) addresses a lot of industry’s concerns about how a federal agency might go about conducting and publicizing comparative research.

There’s plenty of substantive reasons for industry to support the approach outlined in Schrader’s bill. (You can read our coverage of the bill here; for more on why industry is so concerned about CER, start here.)

But what caught our attention was a short clause in the bill labeled “Physician Out.” The provision is an effort to put into legislative language a protection against industry’s nightmare scenario: a situation where a federal agency essentially dictates treatment based on one-size-fits-all conclusions about comparative (and cost) effectiveness.

So, the bill says:

“None of the reports submitted under this section or research findings disseminated by the [new federal comparative research] Institute shall be construed to prevent the physician and patient to ultimately determine what is best for the patient involved given the individual circumstances of different patients.’’

Does anyone else hear an echo of the now infamous “non-interference” clause included in the Medicare prescription drug legislation enacted in 2003? That provision famously prohibits the federal government from interfering in the pricing of prescription drugs sold under the Part D benefit.

The protection was deemed critical by biopharma companies—especially on the biotech side of the ledger—as a way to assure investors that the new law was not a price-control bill.

But it also became an instant rallying cry for Democrats, who painted the Part D program as gift to Big Pharma at the expense of better prices for the elderly and disabled.

To us, the hue-and-cry over the clause was always much ado about nothing. The entire Medicare Part D model was premised on the notion that private drug insurance plans would take risk for delivering high quality care at the lowest possible cost. If you believe that model works, there is no reason for the government to interfere in the first place. On the other hand, if the Part D model didn’t work, price controls were inevitable.

More to the point, the Bush Administration had no intention of interfering, so the clause protected against a threat that didn't exist. In the end, the “non-interference clause” didn’t add a penny to the bottom lines of any biopharma companies. But it did undercut the political payoff industry might have gotten from Part D.

The pharmaceutical industry deserves credit for making the drug benefit happen at a time when there was no reason to believe it would. Yes, it was good for business, but it was also good for Medicare beneficiaries.

It would have been naïve to expect a grateful American public to shower Big Pharma with love—but thanks to “non-interference,” something closer to the opposite happened. So, whatever good the “non-interference” clause did to reassure investors, it was a gift to critics of the industry and especially to the Democratic party, allowing them to score political points without undercutting a long-held goal of expanding the generosity of the Medicare program. The fact that the Democrats have dropped the issue (for the time being at least) doesn’t change the reality that the outcry over the provision probably helped a few of them get elected in the first place.

Will history repeat itself with the effort to prevent “interference” in the doctor-patient relationship? On its face, the clause strikes us as another exercise in wistful thinking if not legislative over-reaching. If your belief is that CER is a conspiracy to create a government-dictated health care rationing system, why would these few words make a difference? More realistically, if government-funded CER defines professional standards and coverage policy, there is no need for anyone to interfere in prescribing decisions—they will conform regardless.

The bigger issue is that all this emphasis on protections seems to us to be painting industry in the wrong light—defined by fear rather than opportunity.

After all, everyone in industry believes that pharmaceutical therapy in general is a cost-effective form of health care. (Lilly CEO John Lechleiter made that argument earlier this month during a DC health care policy address.)

The fear that CER will be defined as driving down the small slice of spending on health care devoted to pharmaceuticals is understandable—but probably misplaced. After all, even if pharmaceutical spending is zeroed out, health care spending will still be on an unsustainable course in the decades ahead. Over time, any federal comparative research effort is much more likely to focus on variations in practice that drive huge costs, rather than focusing narrowly on whether drug A is better than drug B.

So, by rights, biopharma companies should be leading the charge on comparative effectiveness. Instead, the perception is that industry opposes CER. That is not the official position of any company, to our knowledge, but that is beside the point. Right now, it looks like industry is afraid of CER—as if it doesn’t believe what it says about drugs being cost-effective.

And that’s the danger of falling into the “non-interference” trap. If biopharma companies truly believe in the value of their therapies, they shouldn’t let themselves be defined as afraid of the consequences of research to prove it.